State wipes out expired leases, on track to save $20M in rent

State government property officials say they have eliminated all expired leases in which the state was occupying office space on a month-to-month basis.

Doug Finke

State government property officials say they have eliminated all expired leases in which the state was occupying office space on a month-to-month basis.

In the process, the Department of Central Management Services said eliminating holdover leases and consolidating other office space around the state will save the state $20 million.

CMS just beat a state law, effective July 1, that will require the state comptroller to withhold payments in cases where a lease has been expired for more than six months.

Auditor General William Holland reported in April that, at the end of June 2009, nearly 100 leases had been expired for more than six months. More than half of the leases had been expired for five years or more.

“Governor (Pat) Quinn delivered a clear directive to this agency to perform a top-to-bottom review of the state’s space needs, eliminate holdover leases and ensure that any space we pay for is being used in an efficient and cost-effective manner,” CMS Director James Sledge said in a written statement.

Since early 2009, CMS said, it has consolidated, rebid and renegotiated 197 leases across Illinois. In total, it said, that effort will save more than $20 million in rental costs annually.

The state has also been reducing the amount of space it leases in total, a reflection of a shrunken state workforce. The agency said it has eliminated almost 750,000 square feet of unnecessary office space.

It was holdover leases, however, that brought the department regular criticism from state auditors. With a holdover lease, the state was essentially a month-to-month tenant and a landlord had the right to evict or raise rents on short notice. Landlords didn’t do that, although the threat was there.

“Failure to address leases in holdover status has impacted the department’s ability to effectively manage occupancy costs and revenues by property and agency,” auditors said in the most recent review of CMS operations.

CMS said it was paying $66 million a year on holdover leases. In total, the agency said it’s entered 132 new leases costing about $58.7 million.

Among the significant lease savings, according to CMS, was $1.7 million saved on space for the Illinois Department of Transportation’s Traffic Safety Division. The division has been moved from leased space in a building near IDOT’s headquarters on Dirksen Parkway to unused space in the Illinois Environmental Protection Agency building in Springfield.

That move came only after by ex-Gov. Rod Blagojevich tried to move the division to leased space in southern Illinois. A lawsuit was filed to block the move and a legislative panel also voted against the idea. Quinn finally stopped the southern Illinois move after becoming governor.

CMS said it is also saving $1.2 million by moving the Department of Commerce and Economic Opportunity out of its longtime headquarters at 620 E. Adams St. About 190 employees were relocated to the Ridgely Building at 500 E. Monroe St. and another 100 to 607 E. Adams St.

Another $1 million is being saved by moving the Department of Children and Family Services out of leased space at 628 E. Adams St. About 30 employees are moving to 406 E. Monroe St., where DCFS already has leased offices. Another 54 were moved to 208 W. Cook St. and 56 to 726 S. College St.

Doug Finke can be reached at 217-788-1527.

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